Tech Spending Remains Strong, Says IDC

February 5, 2012

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[Techtaffy Newsdesk]

According to the new International Data Corporation (IDC) Worldwide Black Book just released, IT spending increased by 5 per cent at constant currency in 2011, despite the worsening economic situation in Western Europe and volatility in other regions.

Emerging markets continued to lead the way, with tech spending in the BRIC countries (Brazil, Russia, India and China) enjoying another year of double-digit growth. Strong demand for mobile devices and software across most regions ensured a positive finish to the year, despite the impact of the hard disk drive (HDD) shortage on PC markets.

In U.S. dollar terms, the IT industry grew by almost 9 per cent in 2011, but year-to-year comparisons could be difficult for U.S.-based IT vendors this year if currency conditions are less favorable. In constant currency, IDC projects another year of 5 per cent growth for worldwide IT spending in 2012. Hardware and software spending are each forecast to increase by 6 per cent (in constant currency), with 4 per cent growth in IT services.

Strongest growth in 2011 came from smartphones (+46 per cent), software (+6 per cent) and disk storage systems (+6 per cent). Businesses continued to invest in infrastructure upgrades, along with new software applications and mobile devices (including tablets).

These positive trends are expected to continue in 2012, when enterprise spending on network equipment will also accelerate as many organizations invest in network upgrades to cope with the continuing increase in digital information, which will meanwhile ensure another positive year for the storage market. By the end of 2012, the PC industry will also return to positive growth.

“There are risks to the outlook for 2012, mainly related to macroeconomic weakness in Europe, where IT spending is still weak,” said Stephen Minton, Vice President of IDC’s Global Technology and Industry Research Organization. “In a downside scenario, things could get much uglier in Europe and have a ripple effect through other regions. But leading indicators in the U.S. have improved in recent months, and emerging markets show no signs of a slowdown yet.”

The macroeconomic crisis in Europe has already had a severe impact on IT spending in that region. Overall IT investment was flat in 2011, with declines in spending on PCs, servers, storage, peripherals and enterprise network equipment. The recovery in Europe will be a long haul, with less than 1 per cent growth this year and 3 per cent in 2013.

“Europe is going to be a long, drawn-out recovery,” said Anna Toncheva, program manager and economist in IDC’s Global Technology and Industry Research Organization. “The debt crisis will take a long time to resolve, and there are numerous downside risks which could yet see the unravelling of the European single currency and, in the near term, an escalation of the crisis due to sovereign debt defaults in peripheral Eurozone countries.”

In other regions, however, the momentum of 2011 is still evident in recent polls, which show continuing enthusiasm for tech investment amongst businesses and consumers.

In the U.S., where IT spending increased by 7 per cent last year, 2012 is likely to bring another year of solid growth (5 per cent) driven by mobile devices, software and network equipment. Japan will see a return to positive growth, after the declines triggered by last year’s tsunami and earthquake disaster. IT spending in Brazil, Russia, India and China will be up by 9 per cent, 11 per cent, 16 per cent and 15 per cent, respectively.